Dec. 18 (Bloomberg) -- The U.K. will force banks to
separate their investment and consumer businesses as part of its
acceptance of the findings of the John Vickers-led Independent
Commission on Banking, business secretary Vince Cable said.

“Tomorrow, the government is going to launch this
initiative on the banks, accepting in full the Vickers
commission,” he told BBC television today. “We’re going to
proceed with the separation of the banks, the casinos and the
business lending parts of the banks.”

Former Bank of England Chief Economist Vickers recommended
in a Sept. 12 report that banks build fire breaks between their
consumer and investment banks and boost the amount of loss-absorbing equity and debt they hold to between 17 percent and 20
percent. Since 2007, the government has had to spend, pledge and
loan 850 billion pounds ($1.3 trillion) to rescue British banks.

“These are vital reforms to protect taxpayers and
consumers in the future, which the government must get on and
legislate for rapidly,” lawmaker Chris Leslie, who speaks for
the opposition Labour party on financial matters, said in an e-mailed statement. “The independent commission should be asked
to publish a report in 12 months on what progress has been made
in implementing and legislating for these reforms.”

The announcement comes a week after Prime Minister David
Cameron refused to join a European accord to stem the euro
region’s debt crisis because it wouldn’t give the U.K. the right
to veto future financial regulations. The Vickers proposals are
part of the government’s effort to prevent another financial
crisis and shield the taxpayer from future bailouts.

‘Too Big to Fail’

“We cannot risk having a repetition of that financial
catastrophe that we had three years ago,” Cable said. “We
can’t have a position where the banks are too big to fail.”

Chancellor of the Exchequer George Osborne will say in
Parliament tomorrow that the government will enact the reforms
stemming from the report and the Treasury will publish its
response. The changes are to be implemented by 2019.

The units inside the fire breaks will include all checking
accounts, mortgages, credit cards and lending to small- and
medium-sized companies, the report said in September. As much as
a third of U.K. bank assets, or about 2.3 trillion pounds, will
be included, the document said. Trading and investment banking
activities will be excluded from the ring-fence. Standard &
Poor’s said Sept. 14 the elements of a bank outside the ring
fence face a credit-ratings cut as they won’t be able to count
on government support.

European Accord

Cameron’s rejection of the European accord, which included
new fiscal rules, threatened to create a rift in his
Conservative-led coalition government as members of the minority
Liberal Democrat party claimed Britain will be left out of plans
made by the other 26 nations signing the treaty.

“Negotiations broke down and left us in an isolated
position, which I couldn’t and don’t welcome,” he said.
“There’s no possible salvation for Europe as a whole and no
route out of these difficulties we face unless we work
together.”

Cameron’s veto has given his party a boost in polls. A
survey by ICM for the Sunday Telegraph showed the Conservatives’
lead in voting intentions against the opposition Labour Party
widened 2 points since the start of December to 40 while support
for Labour dropped 2 points to 34 percent. The six-point lead is
the widest since June last year. The Liberal Democrats held at
14 percent. ICM polled 1,008 people from Dec. 14 to 15.